Common Misconceptions on Car and Home Insurance

By Caitlin in Posts

If you own your house, you know you must have home insurance. Driving a car is extremely risky without auto insurance. Insurance is one area of our lives that many of us live with while we are not fully clear about what we are paying for. Having paid insurance allows most people to have peace of mind, and yet, when there is an incident, they will run to their policy to see if they are covered. Here is a look at the most common misconceptions of these two most commonly used policy types to aid you in choosing the right coverage at the right price.


  • The longer you insure, the more the insurance company cares for you. Many people will stay with the same insurer for years. There are always stories of those who have trouble with their insurance after a natural disaster. They believed their insurer would look after them because they have paid their home contents insurance premiums promptly for many years. The amount of time you have been paying for an insurance policy has nothing to do with consideration for payment upon claim. The only thing that matters is the details of the policy. The policy is a contract, and that and the conditions of the incident are the only determining factors for claim payment. This is why it is important to regularly compare insurance quotes. If another provider has a good record, a better policy and a better price, it only makes sense to change.


  • All insurers are essentially the same. This is about as far from the truth as possible. Insurance companies specialise in different areas. Their rates and policy details will also change on a regularly basis. Market forces mean insurance providers are in serious competition. This will further influence what they have on offer. Some insurance companies are actually just trading policies. The main global underwriters protect some insurance companies while some insurance companies underwrite themselves. All of these factors influence the type of insurance they offer, and it certainly influences price.


  • Your insurer needs to explain the policy before you purchase. Any insurance policy is a contract. Any insurance company will give you assistance in explaining the policy, but ultimately, it is our own responsibility to understand the details. Every policy is different, and the terminology used in each one can actually have very different meanings. The definition of water damage and rain damage on different car insurance policies will probably be very different. It is our own responsibility to understand the terminology and the definitions used in our insurance policy. Ultimately, an insurance company will make an initial decision to pay a claim, or not. This does not mean they are correct and they have the ultimate right to decide. Litigation is always an option, although can be costly.


The best insurance providers are changing the way they do business. Fine print has been removed from contracts, and they do their best to explain, elaborate and demonstrate the details of each policy. They provide case studies and other real life examples to assist their customers. Ultimately, having their clients fully understand their policies makes sense. Is your current insurance provider treating you properly?


All consultations and conversations with Loans Canada and its partners are confidential and risk-free. Speak with a trusted specialist today and see how we can help you achieve your financial goals faster.

Loans Canada and its partners will never ask you for an upfront deposit, upfront fees or upfront insurance payments on a loan. To protect yourself, read more on this topic here.